A Consumer Has Preferences Over Two Goods: X and Y

question 212

Multiple Choice

A consumer has preferences over two goods: x and y.Suppose we graph this consumer's preferences (which satisfy the usual properties of indifference curves) and budget constraint on a diagram with x on the horizontal axis and y on the vertical axis.At the consumer's current consumption bundle,the consumer is spending all available income,and the marginal rate of substitution is less than the slope of the budget constraint.We can conclude that

• A)the consumer is currently maximizing satisfaction.
• B)the consumer could increase satisfaction by consuming more x and less y.
• C)the consumer could increase satisfaction by consuming less x and more y.
• D)the consumer could purchase more x and more y and increase total satisfaction.

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Definitions:

Unemployment Of Resources

Unemployment Of Resources refers to a situation where factors of production, such as labor and capital, are not being used in the production process.

Production Possibilities Curve

A graphical representation of the maximum quantities of two goods or services that an economy can produce when utilizing its resources fully and efficiently.

Circular Flow Diagram

A visual model of the economy that shows how dollars flow through markets among households and firms, illustrating the interdependencies of economic activities.

Markets For Goods

Platforms or locations where goods are bought and sold, encompassing both physical locations and virtual marketplaces.